With Casey’s on board, will E85 and E15 gas catch on in Iowa?

Source: By Kevin Hardy, Des Moines Register • Posted: Monday, June 5, 2017

Nearly 9 of every 10 gallons of gasoline sold in Iowa last year contained some ethanol.

But despite the proliferation of corn alcohol, higher blends of ethanol fuel have been slow to catch on across the state.

E85, approved for use in Flexible Fuel vehicles, represented 8.5 percent of all fuel sold in 2016, according to the Iowa Department of Revenue.

E15, which is approved for all vehicle models 2001 or newer, sold even less: The roughly 6 million gallons sold in 2016 represented less than 4 percent of all the gasoline sold at Iowa pumps.

But ethanol backers are cheering the slow and steady roll out of fuels containing higher amounts of ethanol by major convenience store chains:

  • Kum & Go already sells E15 at 112 stores across the state and E85 at 202 stores, with plans to continue adding pumps as it builds new stores.
  • In May, Kwik Star announced that it added E15 to 17 of its Iowa locations.
  • The same month, the state’s largest convenience store chain, Casey’s General Stores, announced plans to test E85 and E15 fuels at 17 stations in the Midwest, including seven in Iowa — a move that backers hope will help bring the fuels to more mainstream acceptance.

“Casey’s is more than just one of Iowa’s largest fuel retailers,” Iowa Renewable Fuels Association Managing Director Lucy Norton said in a news release. “It’s our pizzeria, our grocery store, our coffee shop.”

Casey’s Senior Vice President and CFO William Walljasper said the chain hasn’t committed to a large-scale rollout of E85 and E15.

“It’s not like it’s a widespread thing,” she said. “It’s kind of a test mode.”

But he said the convenience store chain implemented its test for a reason: “We certainly noticed there have been more of our peers offering those two products. And so we thought it would be an opportunity to at least test those products and see how the customer reacts.”

Stations would ‘totally sell it’

In the Midwest, consumers are fairly familiar with E10, gasoline containing 10 percent ethanol. Iowans bought more than 1.3 billion gallons of E10 last year.

E85, which can contain as much as 85 percent ethanol, has a built-in audience with drivers of flexible-fuel vehicles, which have been on the market since the 1990s.

But E15 has faced a tougher road to public acceptance, said Dawn Carlson, president and CEO of the Petroleum Marketers and Convenience Stores of Iowa. It’s offered at only about 65 gas stations in Iowa and 550 across the country.

Many chains are only making the upgrade as part of new store construction projects. Both E85 and E15 require specific types of tanks, hoses and dispensers.

That makes a transition a costly endeavor, she said, and stores that have received state or federal grants are most likely to make a change. In some cases, ethanol producers will directly subsidize the transition of pumps and tanks.

“If their customers were coming in asking for it, they’d totally sell it,” Carlson said. “They would tear up their tanks and bust up the concrete to update.”

The lack of consumer acceptance is largely a byproduct of confusion, Carlson said. The EPA has approved E15 for use on all 2001 vehicles and newer.

But obscure regulations designed to protect air quality mean the fuel can only be marketed to flex-fuel vehicles during the warm summer months — a rule that doesn’t apply to E10 or E85 fuels.

That means retailers must change labels several times each year.

“I don’t think there’s good understanding at all,” Carlson said. “A lot of education needs to occur before it goes statewide. And quite frankly, it’s going to be tough to do that and help consumers understand.”

‘It’s just about earning a trial’

Jim Pirolli, vice president of fuels for Kum & Go, says consumers are slowly coming around to accepting fuels like E15.

“We’re all creatures of habit,” he said. “We go to the same place for fuel. We use the same thing every time because it works. And we keep doing that instead of making a change.”

Kum & Go has worked to educate customers on the benefits of the higher-octane fuels. Once they try a product like E15, they generally stick to it, he said.

“Now it’s just about earning a trial with people and letting them know that it’s safe and it’s usually a better option for them to put in their car,” he said. “This is a great product, it’s environmentally friendly. It’s going to lower the cost of getting in your vehicle.”

E15 is priced several cents below the more commonly purchased E10 fuel to provide a financial incentive for consumers to switch, Pirolli said. But with gas prices hovering around $2.00, the incentive isn’t as strong as it might otherwise be.

“When we see gas prices shoot back up toward $2.40 to $2.50 a gallon for super unleaded, we see a lot of people go to E15, and the flex-fuel vehicles go to E85,” he said.

Like many retailers, ethanol-free fuels now represent a small fraction of Kum & Go’s gasoline sales.

“The demand for the 87 octane with no ethanol in it is shrinking dramatically,” Pirolli said.

‘There’s absolutely no difference’

A year ago, about 40 Iowa stores offered E15, said Norton, with the Iowa Renewable Fuels Association. Now, 124 stores are offering it at the pump.

“We have seen and will continue to see some pretty dramatic growth in the number of stations offering E15 in Iowa,” she said.

By the end of the year, she expects some 800 retailers across the country to offer E15.

Groups such as the Environmental Working Group, question the purported environmental benefits of ethanol fuels. It calls the very idea of powering cars with corn ethanol a “false promise.”

But Norton said “there’s absolutely no truth to anti-ethanol claims.”

She said ethanol fuels perform better, have lower emissions and contain fewer carcinogens than other petroleum-based fuels. The miles-per-gallon performance of ethanol fuels is negligibly lower than ethanol-free gas, she said, and is more than made up for with lower prices at the pump.

Customers moving from the widely sold E10 to an E15 product shouldn’t notice any changes — other than savings at the pump, she said.

“There’s absolutely no difference between operating a vehicle on E15 compared to E10. You’re going to spend the same, you’re going to get the same gas mileage,” she said. “The difference is you’re going to get a little higher octane. You’re paying a lower cost.”